GENERAL INTEREST / Fund Managers' Picks
MUTUAL FUND MANAGERS LEANING TO INDUSTRIALS
TORONTO, May 22 /CNW/ - Canadian mutual fund managers are favoring
industrials over banks and utilities, according to a first quarter 1998
analysis.
Portfolio Analytics Limited (PAL) says the results of its survey suggest
mutual fund managers are continuing to shy away from interest-sensitive
stocks. While the TSE 300 Composite index -- the most widely used benchmark
for the broad Canadian equity markets -- held just over 23% in Financial
Services stocks, the average equity fund manager was a full 6% shyer with a
17% weighting. A similar situation was observed for the Utility stocks, with
the average equity fund a full 5% lower than the TSE's 11.4%, coming in at
6.3%. Financial Services is the largest portion of the TSE 300's 14 industry
sectors, followed by the Industrials sector.
While most other sectors of the Canadian market remain similarly weighted
to the broad market benchmark, a definite trend to overweighting the
industrial stocks is apparent. The average equity fund holds just over 22% in
industrial stocks compared to the market's 18%. This relative overweighting
has been creeping up for the past eight months, according to PAL's PALTrak
databases. On average, the industrials make up the largest portion of Canadian
equity mutual funds, followed by Financial Services stocks. While no firm
trend has been established, first quarter results indicate a slight increase
in popularity of the Oil and Gas Sector as well. Equity fund managers, on
average, overweighted this sector by some 2.5% over the TSE 300's 10.6%
exposure.
<<
Realtive Weighting of Canadian Equity Funds to the TSE 300, March
1998
Per Cent Difference
from the TSE 300
Fund Category Composite Index
------------- ---------------
Industrial +4.4
Oil & Gas +2.5
Merchandising +2.4
Communications +1.6
Real Estate +1.3
Consumer +1.1
Paper & Forest Products +0.8
Transportation +0.4
Metals & Minerals -0.3
Conglomerates -1.0
Gold & Precious Minerals -1.1
Pipelines -1.1
Financial Services -5.0
Utilities -6.0
>>
Bank Stocks still King
While the equity funds mildly reduced their overall exposure to financial
services, individual bank stocks still top the most popular list. Over $2.8
billion of Bank of Montreal common stock -- the highest dollar value of all
stocks -- are held by 126 Canadian equity funds. While only $2.2 billion of
CIBC common stock are currently held by the mutuals, it is held by 140 funds,
making it a slightly more popular stock. The mutual funds also hold $2.2
billion of CIBC's proposed merger cohort, TD Bank. In terms of rising
popularity, one of the more notable entries is Imasco Ltd. -- which is held by
at least 89 equity funds at the end of the first quarter -- up 26 from just 63
at year-end 1997. The over $686 million held by Canadian equity funds makes it
stock No.23, up from No.48 in December in terms of total capitalization held.
<<
Top 10 Most Popular Stocks by Total CDN$ Held
---------------------------------------------
No. of funds Total Value
holding of holdings
Company security ($'000)
------- -------- -----------
BANK OF MONTREAL 126 $ 2,819,614
BCE INC 125 $ 2,315,403
TORONTO DOMINION BK 132 $ 2,241,658
CIBC 140 $ 2,224,644
ROYAL BK CDA 134 $ 1,965,877
BANK OF NOVA SCOTIA 132 $ 1,888,609
NOVA CORP 107 $ 1,614,858
ALCAN ALUMINIUM 123 $ 1,184,313
THOMSON CORP 88 $ 1,025,533
GEAC COMPUTER CORP 90 $ 1,000,772
>>
Portfolio Analytics, established in 1988, monitors the holdings of
Canadian Mutual and Pooled Funds and is engaged in ongoing investment fund
research. PALTrak, a Windows(TM)-based program that incorporates a great deal
of this information, is widely used by the institutional, brokerage, and
financial planning communities.
-30-
For further information: Scott Mackenzie, Portfolio Analytics Limited,
Phone (416) 489-7074 ext. 229, e-mail: smackenzie@pal.com, homepage:
www.pal.com
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